Faced with sluggish external demand, weak domestic consumption, rising labor costs, and low productivity, China depends excessively on investment to drive economic growth.

Automation, Productivity, and Growth

Persistently weak labor productivity growth has created a situation in which unit labor costs do not fall, even if real wages remain stagnant or decline.

Productivity growth makes many things possible.

Indeed, productivity growth in India s service sector matches productivity growth in China s manufacturing sector, thereby reducing poverty by enabling wages to rise.

As a result, growth has weak underpinnings.

After all, the loss of competitiveness that led to large external deficits remains largely unaddressed, while adverse demographic trends, weak productivity gains, and slow implementation of structural reforms depress potential growth.

Rapid output growth without equally rapid capital stock or employment growth must have reflected rapid productivity growth.

There is no magical path to higher productivity growth.

Unit labor costs reflect compensation levels and productivity gains in productivity can offset the effect of wage growth.

This disparity reflected some differences in productivity growth but even more so differences in wage growth.

(Admittedly, the Spanish labor market reforms enacted earlier this year may start to lift employment and improve competitiveness and growth on the economy s tradable side, which is constrained largely by low productivity, not weak demand.)

High oil prices also threaten to slow long term productivity growth.

Job creation remains weak, and employment continues to diverge from growth.

This is true even in services, despite slow productivity growth in Europe.

Italy s new leaders must address this situation by decoupling labor s contribution to productivity growth from that of capital and total factor productivity.

That encouraged investment spending, which in turn drove productivity gains and output growth.

To reclaim its promise, India must foster a new generation of productivity growth.

Assuming slower growth in the labor force than in the past decade, no rise in productivity due to capital accumulation, and a decline in multifactor productivity growth to its pre 2000 average implies that annual potential GDP growth will be only 1.4 .

However, overall performance in terms of investment, value added and productivity growth was often quite weak Premature deindustrializers This group included most countries in Latin America, which had achieved a certain degree of industrialization but were unable to sustain a dynamic process of structural change through rapid accumulation and growth.

Persistently weak labor productivity growth has created a situation in which unit labor costs do not fall, even if real wages remain stagnant or decline. Indeed, despite a 1.3 drop in real wages in 2011, unit labor costs remained unchanged.

In particular, they show that services have exhibited unconditional convergence in productivity recently. That is, countries furthest away from the global frontier of labor productivity have seen the fastest productivity growth in services.

And, despite the spike in unemployment, productivity growth in the eurozone is decidedly negative.

But growth in the advanced economies will almost certainly remain weak in 2010.

Indeed, all eurozone members are now experiencing weak economic growth, if not recession.

But, over the same period, annual GDP growth has averaged a modest 3.5 , and productivity growth has slipped into negative territory.

This structure contrasts with the pre 1980 business cycle, which rested on wage growth tied to productivity growth and full employment.

Financial innovation is a great engine of productivity growth and economic well being . Again, no.

Wages have stagnated despite strong productivity growth, while the trade deficit has set new records.

This means that the rich have been creaming off a giant share of productivity growth.

The reduction of poverty as well as working poverty are also dependent on productivity growth.

Productivity growth stems from enhanced adaptive capabilities to use modern technology and commercialize new knowledge.

Growth is endangered, the ruble is weak, and the government budget is in deficit.

The productivity growth that was sustained through the downturn presented both an opportunity and a challenge.

Service sector productivity growth in formerly manufacturing heavy Asian economies has been dismal by international standards.

Even structural reforms that will eventually increase productivity growth can be recessionary in the short run.

Unless it has achieved high enough levels of productivity and growth, it will miss its chance.

Rapid productivity increases in manufacturing had outpaced growth in demand, which meant that manufacturing employment decreased.

They facilitate technology transfer, create jobs, boost productivity, enhance competitiveness, accelerate economic growth and eliminate poverty.

Overall, productivity per worker, which is the major component of growth from within , has consistently declined.

Fostering growth and productivity is central to UNIDO's highly focused sectoral, regional and country specific programmes.

Thus, the recovery of global aggregate demand will be weak, pushing global growth much lower.

Why does slow productivity growth translate into high costs? The problem is that service industries ultimately have to compete for workers in the same national labor pool as sectors with fast productivity growth, such as finance, manufacturing, and information technology.

Sustained rapid growth is the result of poorer countries catching up to rich countries productivity levels not of growth in the rich countries themselves.

Standardization and liberalization in European telecoms underpinned 9 growth in value added and productivity in this period, compared to 6 growth in the US.